[1] The meaning of "where only land is used" subject to the non-taxation of input tax amount under Article 17 (2) 4 of the Value-Added Tax Act and Article 60 (6) 2 of the Enforcement Decree of the same Act

[2] The case holding that the acquisition of a building and the removal of the building and the use of the building site as a site for a new building does not constitute a justifiable ground for not imposing additional taxes on the acquisition value, removal cost, and transfer cost of the existing building

[1] In light of the history, purport, context, etc. of Article 17(2)4 of the Value-Added Tax Act, Article 60(6)2 of the Enforcement Decree of the same Act, “where only land is used” in the phrase “where a building is acquired and the building is removed and only the land is used,” which is subject to the non-taxation of the input tax amount, includes not only the case where the land is used as a site for a new building but also the case where it

[2] The case holding that the fact that the acquisition price of the existing building, the cost of removal, and the cost of transfer of ownership paid for the use of the land for the new building site after acquiring the building and removing the building and using the land as the site for the new building does not constitute a justifiable reason for not imposing additional tax due to an error or misunderstanding as to Article 60 (6) 2 of

[1] Article 17(2)4 of the Value-Added Tax Act, Article 60(6)2 of the Enforcement Decree of the Value-Added Tax Act / [2] Article 17(2)4 of the Value-Added Tax Act, Article 60(6)2 of the Enforcement Decree of the Value-Added Tax Act

Plaintiff (Attorney Kim Dong-dong, Counsel for the plaintiff-appellant)

Deputy Director of the Tax Office

Seoul High Court Decision 2006Nu3386 delivered on December 22, 2006

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. According to Article 17 (2) 4 of the Value-Added Tax Act and Article 60 (6) 2 of the Enforcement Decree of the Value-Added Tax Act, the input tax amount related to the acquisition and removal cost of the removed building where a building is acquired to remove the building and only uses the land is stipulated not to be deducted from the output tax amount, as the input tax amount related to capital expenditures for the creation of land. In light of the history, purport, and context of the above Acts and subordinate statutes, “where a building is acquired with the land in which the building is located, and only removes the building and only uses the land,” which is subject to non-deduction of the input tax amount, includes not only the case of using the land as a site for a new building, but also the case of using the land as a site for a new building. There is no error in the misapprehension of legal principles as to non-deduction of the input tax

2. Additional tax under tax law is an administrative sanction imposed as prescribed by the Act in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, where a taxpayer violates various obligations, such as a return and tax payment, without justifiable grounds, and the taxpayer’s intention or negligence is not considered, but does not constitute a justifiable reason that does not cause the taxpayer’s breach of such obligations (see Supreme Court Decisions 91Nu5341, Nov. 26, 1991; 2002Du10780, Jun. 24, 2004).

According to the reasoning of the judgment below and the records, where a building is acquired and the building is removed and the land is used as a site for a new building, the input tax amount for the expenses related to the purchase and removal of the existing building was prior to filing a return of early refund from the output tax amount, and the National Tax Service and the established rules of the Ministry of Finance and Economy of the Republic of Korea, etc. of this case were included in the acquisition price of the existing building and the cost of removal and transfer of ownership as prescribed by corporate accounting standards in the acquisition price of the land, which is exempt from tax, in accordance with corporate accounting standards, in the case of accounting such as the entry of the head of each account and the head of each account, etc. In light of these facts, the Plaintiff’s return of input tax amount for the acquisition price, cost of removal, and transfer of ownership to the existing building as the refund tax amount and the refund of such tax amount is due to the mistake or misunderstanding of Article 60(6)2 of the Enforcement Decree of the Value-Adde

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Si-hwan (Presiding Justice)